Gambling has become an important part of people’s lives. In the US alone, 200 billion dollars are bet annually on professional sporting events. This means millions of people are placing wagers daily on the outcome of these contests. The problem is it often feels impossible to beat the bookies. Let’s see below how to place large bets when gambling.
Understand your betting type and risk profile
It sounds obvious but most people don’t understand their betting behaviour. If you’re a gambler then you’ll have different preferences (risk/reward) than if you’re a long-term investor. What do I mean by this? It comes down to understanding the concept of volatility vs return. A good example of this can be found in the stock market. For most investors, the goal is to make money over time with little or no volatility. On the other hand for gamblers, they want lots of volatility which leads them to place larger bets more frequently. If these differences aren’t understood then any kind of advice will fail because it won’t fit the needs of either party.
Be disciplined about betting limits
This is a very common mistake amongst new investors who think that bigger is better. But in reality, bigger bets are associated with higher risks. So before placing that massive bet, you need to set limits that protect your capital so that it doesn’t get destroyed.
Place multiple small bets
In this situation, we are talking about splitting up big bets into smaller ones and waiting until all outcomes are known. So instead of making one big bet at a time, first place 5 separate bets. This way, even if 1 out of those 5 losses you still come out ahead.
Don’t take unnecessary risks
I know this isn’t easy since many times we want to feel like we’re in control of something. But as a rule of thumb, avoid taking huge risks such as sports betting where you’re risking thousands of dollars. I don’t gamble professionally but I might choose to play roulette now and again.
Always use a stop loss rule
A stop loss is just another word for protective limit. One thing that stops me from gambling is the possibility of losing everything. So I always try to place my maximum bet less than 30% of my total account value.
Margin allows you to borrow funds against future profits from winning trades. This means that you can afford to take greater risks with your investments.
Avoid using leverage
Leverage is when you multiply your initial investment by some amount (leverage rate). So instead of putting 10k into a trade, you would use 20k ($20,000). While leveraging trades may sound appealing, there is almost always a fee involved. And once fees get added to a leveraged position, it could quickly turn into bad news.
Take a break
The last piece of advice is to just take a break. As humans, we are not built to handle stress well. So when it comes to gambling, it’s very understandable why many lose their entire bankroll within days or weeks of starting.
Understand the expected value
Expected Value describes how much profit someone should expect on an investment based on certain criteria. An example of an expected value calculation: If I invest $1000 on a horse race with a 50% chance of winning some amount between $500-$2000, then my expected winnings are $750. Expected value helps ensure that riskier opportunities will net us a profit.
Try to identify your weaknesses
One of the biggest mistakes that people make when trying to win money through gambling is believing that it’s possible to predict what they will do next. When it comes to investing, identifying our strengths and weaknesses is a key step toward success. Being able to recognize what has worked in the past and what hasn’t can help guide decisions in the present.
Look for trends
Some people believe that they can spot a trend and find a stock that’s going to be successful. The problem is that many of these “investors” have never invested successfully themselves. Instead, they look around and see what everyone else is doing and decide to join the herd. To be successful, it takes more than simply following a trend. You have to analyze the trend, understand the market forces behind it, and decide whether or not you think it’ll continue.
In conclusion, it’s important to remember that there is no sure way to succeed at gambling. However, there are things that we can learn from those who have gone before us. Hopefully, we’ve learned some valuable lessons about the subject. Good luck!